Author Archive
What’s in a Name? Property Rights, Legal Rights, and Economic Rights
| Nicolai Foss |
I tend to find the property rights approach associated with such economists as Coase, Demsetz, Alchian, and perhaps particularly Yoram Barzel extremely useful, informative, and insightful. (I also find their approaches more generally useful than the more recent property rights approach associated with Oliver Hart and his colleagues and students; on the differences between the “old” and the “new” property rights approaches, see this paper). It spans multiple level of analysis, and its explanatory reach seems to me to be huge. Most of my papers over the last few years utilize property rights notions in one way or another.
However, I have found that there are some basic difficulties of communicating property rights economics. It is not so much a matter of too many people (still) arguing that the Coase theorem “doesn’t hold” (usually the same types who argue that PD games are “wrong”). (more…)
Leijonhufvud Papers
| Nicolai Foss |
Here is one more entry in the ongoing O&M Leijonhufvud feuilleton. Leijonhufvud is still alive and kicking, and has a couple of very nice downloadable working papers in the series of the Department of Economics, University of Trento (downloadable here).
In “The Uses of the Past,” a keynote speech to the European Association of the History of Economic Thought, Leijonhufvud takes issue with the
… misconception … that neoclassical economics was always about optimizing and equilibrium. Up at least through the 1950s, neoclassical economists always distinguished between static and dynamic theory. Dynamics referred, on the one hand, to the adaptation of individuals and, on the other, to the market process whereby they collectively groped towards equilibrium. Equilibria were understood as the point attractors of these processes. Static theory dealt with the property of these attractors … What is called dynamic theory today is just the generalization of the old static theory.
More on Leijonhufvud
| Nicolai Foss |
The great economist Axel Leijonhufvud has been the subject of earlier posts here on O&M (here and here). A recent issue of the Cambridge Journal of Economics features an article by Elisabetta de Antoni (a colleague of Leijonhufvud at the University of Trento) on “The Auctioneerless Economics of Axel Leijonhufvud: The “Dark Forces of Time and Ignorance” and the Coordination of Economic Activity.”
The article contains some strange claims — e.g., it claims that “Leijonhufvud has the unquestionable merit of having devised the metaphor of the auctioneer” (p. 2) and this auctioneer is the “personification of the (equally occult) ‘invisible hand’ of the market” (p.3) — but there are many interesting observations and points. Thus, it doesn’t over-concentrate on the 1968 book, and nicely tells the story of how Leijonhufvud became increasingly heterodox, as the econ profession since about the mid-1970s moved towards the intertemporal optimization approach that still holds sway. On the whole, the paper is a reliable and informative guide to the thinking of one of the most fascinating contemporary economists.
More on Methodological Individualism and Subjectivism
| Nicolai Foss |
In an earlier post, I argued that methodological individualism involves “… almost with necessity some kind of subjectivist methodology.” David Gordon made the comment that methodological individualism does not have “… to involve a commitment to a subjectivist methodology. The sociologist George Caspar Homans combined methodological individualism with behaviorism.” I didn’t have the time to respond to Gordon then, so the following is a somewhat belated response of sorts (or perhaps just some further reflections prompted by Gordon’s comment). (more…)
More on Strategic Factor Markets
| Nicolai Foss |
Jay Barney’s 1986 paper, “Strategic Factor Markets: Expectations, Luck and Business Strategy,” is a classic of recent strategic management literature and one of the key contributions to the resource-based view. It is also one of those papers where the argument — in this case that firms can only gain a competitive advantage if they buy at least some inputs at a price below the net present value of those inputs — seems so irritatingly obvious — that is, after you have read the paper. (more…)
Levels Issues II: Recommended Reading
| Nicolai Foss |
One of the most insightful discussions of what we may mean by “levels of the social” that I know of is a recent and apparently still unpublished paper with the same title by philosopher (and chancellor) Daniel Little. Litte defends micro-foundations, mechanism-based explanation, denies macro-macro causation, and argues that the “molecule” of social phenomena is the socially situated individual in a local context. Although the latter position may be too much to stomach for the die-hard methodological individualist, there is much with which Austrians and other economists can agree. An excellent read!
Thank You, Dick!
| Nicolai Foss |
Many thanks to Dick Langlois for guest blogging at O&M. Dick has contributed some excellent blog posts which are among the most viewed ones on the site. We hope Dick will continue to visit O&M in the future and post comments. Thanks, Dick, for allowing us to benefit from your fertile mind.
Foucault and Economics
| Nicolai Foss |
Catallaxy has a post on “Foucault at the Sydney Institute.” More precisely, the post is about a presentation on Foucault by Foucault scholar, Clare O’Farrell:
She noted that Foucault’s ideas are rapidly growing in popularity and influence in a wide range of fields including the social sciences and the humanities, also nursing, health administration and education. Unfortunately this list coincides with a list of problem areas in my humble opinion, though I would not be rash enough to blame Foucault’s influence alone.
O’Farrell is then ” .. asked about Foucault’s economics … The reply did not address the specific issues but it seems that late in his life Foucault wrote a book (in French) on the rises of neoliberalism.” (more…)
Levels Issues I: Homogeneity and Heterogeneity
| Nicolai Foss |
Issues that relate to levels of analysis are some of the most vexing ones in social science, both theoretically and empirically. I plan to post on levels issues over the coming week or so. Today’s topic: Homogeneity and heterogeneity across levels of analysis. (more…)
Are Reviewers Too Powerful?
| Nicolai Foss|
Reviewers certainly are powerful. Are they too powerful?
When I served as Departmental Editor of the Journal of International Business Studies it occassionally happened that I issued invitations to revise and resubmit , against the advice of the reviewers. I often accepted papers for publication that at least one and sometimes two reviewers hated. Once it happened that after I had accepted such a paper, a very dissatisfied reviewer — a prominent Wharton scholar — wrote to the chief editor, complaining that I was undermining the refereeing institution. Well, I thought the reviewer was wrong and that I (and the author) was right. And I thought I had no obligation to slavishly follow his advice, which was just that, a piece of advice, and not a verdict. (more…)
The O&M Readership is Expanding
| Nicolai Foss |
We have been suspecting it for a long time, but now it is an established fact: We have an expanding celebrity readership. Here is a series of nice pics of an O&M celebrity reader preparing to post a comment on a Nicolai Foss strategic management post. Now we only need to get Salma to live up to that surname …
Wal-Mart — Cont’d
| Nicolai Foss |
My co-blogger has recently drawn attention to how Wal-Mart contributes to reducing global poverty. On my recent visit to Atlanta, Georgia, he also arranged a trip to Alabama that in addition to a visit to the Ludwig von Mises Institute was also supposed to include a touristic visit to a Super Wal-Mart, no less (I shall not comment on why the latter visit never materialized, but Peter’s knowledge of the Georgia and Alabama roads may have played a role here).
Apropos of Wal-Mart, the latest issue of the Academy of Management Perspectives (formerly the Academy of Management Executive) features an excerpt from Charles Fishman’s The Wal-Mart Effect: How the World’s Most Powerful Company Really Works — and How It Is Transforming the American Economy. R. Edward Freeman contributes a commentary which predictably concludes that Wal-Mart “… can’t do much right, simply because it is trying to tell its story in the narrow economic mode” (p.40), and therefore sacrifices a number of relevant stakeholder interests. (more…)
Methodological Individualism and the Selfish Gene
| Nicolai Foss |
As a staunch advocate of methodological individualism in the social sciences, I have often experienced the following comment at seminar presentations and in conversations: “Why take the individual as the explanatory atom? Why not go further in the direction of reductionism and begin analysis with the selfish gene?”
The comment is usually (though not always) intended to suggest that an advocacy of methodological individualism is fundamentally arbitrary and that there is no reason why individuals should have a privileged status in an explanatory sense. However, the comment is based on a fallacy, which Livia Markoczy and Jeff Goldberg (1998) call the “driver-seat fallacy.” To wit:
It is all too common for people to imagine that evolutionary psychologists and others are claiming that our thoughts and emotions are driven by our genes … This fallacy misunderstands the way genes work. Genes build bodies. … Once the body is built, the genes have no control or influence on what those bodies do. It makes no more sense to say that genes drive our thoughts and emotions than it does to say that genes pump our blood. Our heart pumps our blood and our brain drives our thoughts and emotions … Our genes are not in the driver’s seat, we are.
Thus, the selfish gene argument against methodological individualism is a red herring.
One More Stride Forward in the Struggle Against Collectivism
| Nicolai Foss |
“Individuals and Organizations: Thoughts on a Micro-Foundations Project for Strategic Management and Organizational Analysis” by Teppo Felin and me has just been published in David Ketchen and Donald D Bergh, Research Methodology in Strategy and Management 3. Here is a working paper version. And here is the Abstract:
Making links between micro and macro levels has been problematic in the social sciences, and the literature in strategic management and organization theory is no exception. The purpose of this chapter is to raise theoretical issues in developing micro-foundations for strategic management and organizational analysis. We discuss more general problems with collectivism in the social sciences by focusing on specific problems in extant organizational analysis. We introduce micro-foundations to the literature by explicating the underlying theoretical foundations of the origins of individual action and interaction. We highlight opportunities for future research, specifically emphasizing the need for a rational choice program in management research.
Silly Things Nobel Prize Winners Say
| Nicolai Foss |
It is comforting to us ordinary mortals that Nobel Prize winners in economics have contributed their share of nonsense. Here at O&M we hope to make the Silly Things etc. post a regularly occurring feature. Today’s quotation is from Douglass C. North’s recent Understanding the Process of Economic Change (2005: 122):
Economists of a libertarian persuasion have for some time labored under the delusion that there is something called laissez faire and that once there are in place “efficient” property rights and the rule of law the economy will perform well without further adjustment. The scandals involving Enron, Dynergy, WorldCom, and others in 2001-2002 should have laid such a delusion to rest.
Scientific Progress in Strategic Management Bleg
| Nicolai Foss |
I have little doubt that strategic management as a field of inquiry has made significant strides forward in the last 3-4 decades. Let’s just ambitiously assert that it has made “scientific progress.” One has little doubt that an overwhelming majority of the Academy of Management’s perhaps dominant division, the Business Policy and Strategy Division, would agree with this assessment. This is not just bias; the BPS may be important because strategic management is a scientific success story. But on what grounds can we assert this? Here are some possibilities: (more…)
Teaching Evaluations: Nationality Discounts and Premia?
| Nicolai Foss |
As is, I suppose, the case with most of the readers of this blog, I am subject to the discipline of student evaluations. I tend to find them pretty useless because their information content is rather low and because the whole process is very noisy and biased, although I do admit that they are a powerful tool for getting rid of teachers who are placed at the left tail of the quality distribution (let me anticipate a possible misunderstanding: I am usually rated in the opposite end of the distribution).
Here is a possible example of bias: I have often observed, and so have many colleagues with whom I have discussed the matter, what seems to be a nationality premium. (more…)
Announcing the New O&M Guest Blogger: Lasse Lien
| Nicolai Foss |
Peter and I are privileged to have been joined here at O&M by some magnificent guest bloggers, first Joe Mahoney and currently Dick Langlois. We will soon be joined by an additional guest blogger, namely Associate Professor Lasse Lien, PhD, Norwegian School of Economics and Business Administration, no doubt one of the smartest (and nicest) Norwegian business administration scholars
Lasse is a friend of Peter and I. Peter has written a series of fine papers with Lasse, all on aspects of diversification. These have their root in Lasse’s PhD thesis on which I was lucky to serve as a supervisor and which he defended in 2004. I am also a colleague with Lasse at the Norwegian School of Economics and Business Administration.
Lasse’s main interest is empirical research practice (don’t expect too many blog posts on cultural conservatism, Misesian praxeology or Lockian/Rothbardian self-ownership from him). He has already announced that he has something provocative in store. We look forward to it, and welcome him at O&M.
“Critical” This and “Critical” That
| Nicolai Foss |
At the ongoing Academy of Management Meetings there are a number of sessions with titles such as “Critical Perspectives on Power in Organizations.” Of course, we all know that “critical” is a code-word for left-leaning (often extremely so) work on the issues with which social science deals, in the traditions of mainly European lefty and muzzy sociologists and philosophers, such as Foucault, Habermas, etc.
Still, I am somewhat disturbed that a scholarly organization, such as the AoM, can accept session titles of these kind. The clear implication of these kind of titles is that the rest of us, who may also be interested in, say, “power in organizations,” are not really critical — which to me means that we are not serious scholars. That implication is evidently preposterous, particularly given the low level of scholarship that often characterizes so-called “critical studies,” including those in management.
New Entrepreneurship Journal
| Nicolai Foss |
I have been hearing the rumours for some time, but now it is an established fact: I just picked up a flyer annoucing the new Strategic Entrepreneurship Journal.
Sounds familiar? Not surprising, as this is launched as a sister journal to the Strategic Management Journal (the flyer displays the frontpages of both journals) with overlapping editors (Dan Schendel and Michael Hitt are the co-editors, the senior advisory board consists of Howard Aldrich, Arnold Cooper, Morton Kamien, Robert Strom and Michael Tushman). The launch of the new journal is so recent that it doesn’t even have a homepage with the publisher (Wiley).
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